Monday, March 29, 2010

Market & Equity Sectors Update $MEE $CHK $BTU

·         Market Update – after spending the last three sessions flat-to-down, equities are out of the gate on a strong note (up ~0.5%), led higher by commodity-linked stocks (energy and materials) and health care; sp500 has been up ~6-7 pts for most of the day so far.  Color on the desk remains consistent – the room is very quiet and volumes are light (the quiet trends are being exacerbated by the holidays this week -  Passover kicks off tonight and markets are closed for Good Friday).  There isn't a ton of conviction behind the buying today…people are worried about repeating the Thurs/Fri trend where a decent open was followed by selling in the afternoon.  Investors very hesitant to chase prices higher and are "reluctantly long", but shorts are scared to initiate positions while longs are staying put.  The tape remains resilient, shrugging off the Russia news overnight and the continued uptick in TSY yields.  Benefiting sentiment today was a slew of M&A headlines (VOD/VZ, CKXE, BWY, AVT/BELM, etc) and the Greek bond sale (Greece sold an oversubscribed bond issue this morning and the country says it is now fully funded for the month of Apr; the deal priced at +310bps, inline w/the indicated guidance).  Technically, the 1180 high from last Thurs is bring watched, and then 1195.  On the downside, people watching for a close below 1156

·         Equity Sectors – the weaker dollar is giving a boost to the commodity-linked groups today; energy is up ~1.7% and materials are up ~1%.  Energy stocks have been among the biggest laggards on a YTD basis.  As of ~11:55am, every energy stock in the sp500 was higher (SWN, MEE, CHK, BTU, DNR, HP are some of the stronger performing names).  The materials sector is being led higher by metals (TIE, CLF, NUE, X, etc, are all outperforming).  Financials are flattish today as the group sees some profit taking after a strong multi-week run (C shrs dip ~3% as investors would have preferred to see a single large secondary vs. a months-long dribble deal).  Industrials stocks are strong today (this group outperformed last week as well) – PCP, ITT, BA, DE, MAS, etc, are all leading the group higher.  Tech is underperforming slightly, as strength in the semis is offset by some selling in the hardware stocks (EMC falls 2.5% and is one of the weakest big stocks in the whole market).  The retailers are for sale today (RSH, URBN, GPS, TGT, BBY, etc, are all off; RSH is underperforming following a cautious mention in Barron's).  The online travel stocks are very strong performers today (EXPE and PCLN). 

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